4 Hospitality Stocks With a High Quality Rank in June

Resort and casino stocks to consider ahead of summer travel season

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James Li
Jun 04, 2021
Summary
  • Job growth misses the consensus estimate for second month in a row
  • Hospitality sector leads job growth in May
  • Investors can find opportunities in high quality resort and casino stocks
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As investors look forward to the summer travel season, four resort and casino stocks that have a high GuruFocus Quality Rank are Choice Hotels International Inc. (

CHH, Financial), GreenTree Hospitality Group Ltd. (GHG, Financial), Monarch Casino & Resort Inc. (MCRI, Financial) and Vail Resorts Inc. (MTN, Financial), according to the All-in-one Screener, a Premium feature of GuruFocus.

Hospitality sector leads job growth in May, but growth underperforms estimates

The U.S. Bureau of Labor Statistics reported on Friday that total nonfarm payrolls increased by 559,000 during May, underperforming the Dow Jones consensus estimate of 671,000 jobs added. The May jobs report follows April’s sharp underperformance. The Labor Department revised April’s job growth upward to 278,000 jobs yet was still significantly down from the consensus estimate of 1 million jobs added. Despite this, the unemployment rate declined from 6.1% to 5.8%, an improvement over the consensus estimate of 5.9%.

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The hospitality sector lead job growth with 292,000 jobs added. The news comes a few days after the U.S. reported this week that new Coronavirus cases increased less than 20,000 over a seven-day average for the first time since March 2020.

As such, investors may find opportunities in hospitality stocks that have a high quality rank. Key factors that determine quality rank include debt ratios, profit margins, returns on invested capital and the number of years of profitability over the past 10 years.

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Choice Hotels International

Choice Hotels International (

CHH, Financial) operates hotels under brands like Comfort Inn and Comfort Suites. GuruFocus ranks the Rockville, Maryland-based company’s profitability 7 out of 10: Profit margins and returns are outperforming over 77% of global competitors despite three-year revenue and earnings decline rates underperforming more than 60% of global travel and leisure companies.

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Gurus with holdings in Choice Hotels include

Ron Baron (Trades, Portfolio)’s Baron Funds and Jim Simons (Trades, Portfolio)’ Renaissance Technologies.

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GreenTree Hospitality

GreenTree Hospitality (

GHG, Financial) operates a network of hotels throughout China. GuruFocus ranks the Shanghai-based company’s financial strength and profitability 7 out of 10 on several positive investing signs, which include a strong Altman Z-score of 4.43, interest coverage and debt ratios outperforming over 82% of global competitors, and profit margins and returns outperforming more than 88% of global travel and leisure companies.

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Monarch Casino & Resort

Monarch Casino & Resort (

MCRI, Financial) operates the Atlantis Casino Resort and Spa in Reno, Nevada, and the Monarch Black Hawk Casino in Black Hawk, Colorado. GuruFocus ranks the Reno, Nevada-based company’s profitability 6 out of 10: Profit margins and returns are outperforming over 82% of global competitors despite three-year revenue and earnings growth rates underperforming more than 65% of global travel and leisure companies.

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Vail Resorts

Vail Resorts (

MTN, Financial) operates mountain resorts and ski areas primarily in the U.S. GuruFocus ranks the Broomfield, Colorado-based company’s profitability 8 out of 10 on the heels of a 4.5-star business predictability rank and profit margins outperforming over 70% of global competitors, despite three-year earnings decline rates underperforming more than 60% of global travel and leisure companies.

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Gurus with holdings in Vail Resorts include

John Rogers (Trades, Portfolio)’ Ariel Investment and Diamond Hill Capital (Trades, Portfolio).

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Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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